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Essays in Efficiency Analysis

Today a standard procedure to analyze the impact of environmental factors on productive efficiency of a decision making unit is to use a two stage approach, where first one estimates the efficiency and then uses regression techniques to explain the variation of efficiency between different units. It is argued that the abovementioned method may produce doubtful results which may distort the truth data represents. In order to introduce economic intuition and to mitigate the problem of omitted variables we introduce the matching procedure which is to be used before the efficiency analysis. We believe that by having comparable decision making units we implicitly control for the environmental factors at the same time cleaning the sample of outliers. The main goal of the first part of the thesis is to compare a procedure including matching prior to efficiency analysis with straightforward two stage procedure without matching as well as an alternative of conditional efficiency frontier. We conduct our study using a Monte Carlo study with different model specifications and despite the reduced sample which may create some complications in the computational stage we strongly agree with a notion of economic meaningfulness of the newly obtained results. We also compare the results obtained by the new method with ones previously produced by Demchuk and Zelenyuk (2009) who compare efficiencies of Ukrainian regions and find some differences between the two approaches.
Second part deals with an empirical study of electricity generating power plants before and after market reform in Texas. We compare private, public and municipal power generators using the method introduced in part one. We find that municipal power plants operate mostly inefficiently, while private and public are very close in their production patterns. The new method allows us to compare decision making units from different groups, which may have different objective schemes and productive incentives. Despite the fact that at a certain point after the reform private generators opted not to provide their data to the regulator we were able to construct tree different data samples comprising two and three groups of generators and analyze their production/efficiency patterns.
In the third chapter we propose a semiparametric approach with shape constrains which is consistent with monotonicity and concavity constraints. Penalized splines are used to maintain the shape constrained via nonlinear transformations of spline basis expansions. The large sample properties, an effective algorithm and method of smoothing parameter selection are presented in the paper. Monte Carlo simulations and empirical examples demonstrate the finite sample performance and the usefulness of the proposed method.

Identiferoai:union.ndltd.org:RICE/oai:scholarship.rice.edu:1911/71945
Date16 September 2013
CreatorsDemchuk, Pavlo
ContributorsSickles, Robin C.
Source SetsRice University
LanguageEnglish
Detected LanguageEnglish
Typethesis, text
Formatapplication/pdf

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